9911796707
|
Home
Issues Involved
1. Determination of income under the head 'Capital gains on sale of shares.' 2. Additions made by the Assessing Officer by disallowing the assessee's claim for bad debts. 3. Confirmation of addition on account of accrued income. 4. Disallowance of depreciation in respect of the assets leased back. 5. Classification of rental income and service charges. 6. Deletion of addition on account of interest accrued on loan advances. 7. Deletion of the disallowance of finance charges. Detailed Analysis 1. Determination of Income under 'Capital Gains on Sale of Shares' - Assessee's Appeal: The assessee argued that the CIT(A) erred in confirming the computation of the average cost of post-1-4-1981 shares of Premier Automobiles Ltd. (PAL). The assessee adopted the Fair Market Value (FMV) as on 1-4-1981 for pre-1981 shares and indexed the cost accordingly. - Department's Appeal: The Department contended that the CIT(A) erred in directing the Assessing Officer to compute long-term capital gain based on the indexed cost of the market value of shares instead of the "average cost" taken by the Assessing Officer. - Judgment: The Tribunal rejected the assessee's method of double indexation and held that the FMV as on 1-4-1981 is unalterable. The cost of acquisition of bonus shares should be determined by spreading the statutory cost over original and bonus shares. The base year for indexation should be the financial year in which the shares were acquired or the statutory date, as applicable. 2. Additions by Disallowing Bad Debts Claim - Assessee's Claim: The assessee claimed bad debts for amounts due from Taparia Steels Ltd. and other parties, arguing that these debts arose in the normal course of business. - Department's Argument: The Department argued that the debts had not been taken into account while computing total income for earlier years, thus not fulfilling section 36(2) conditions. - Judgment: The Tribunal allowed the bad debt claim, holding that the debt arose in the normal course of business and was written off in the books of account, thus constituting a legitimate business loss deductible under section 37. 3. Confirmation of Addition on Account of Accrued Income - Issue: The assessee contended that the addition of Rs. 10,06,567 as accrued income was incorrect, as Rs. 7,75,722 pertained to parties whose accounts were written off as bad debts. - Judgment: The Tribunal confirmed the CIT(A)'s order, following its earlier decision for assessment years 1989-90 and 1991-92, where it was held that lease rent and interest income should be assessed on receipt basis. 4. Disallowance of Depreciation on Leased Assets - Issue: The assessee challenged the disallowance of depreciation of Rs. 23,25,686 on assets leased back to Pertech Computers Ltd. and Indian Hume Pipe Co. Ltd. - Judgment: The Tribunal restored the issue to the Assessing Officer for re-adjudication in line with its previous orders for assessment years 1989-90 and 1991-92. 5. Classification of Rental Income and Service Charges - Issue: The assessee argued that rental income and service charges should be assessed as business income rather than income from house property or other sources. - Judgment: The Tribunal confirmed the CIT(A)'s order, holding that the relevant income should be assessed as income from house property, following its earlier decision for the assessment year 1992-93. 6. Deletion of Addition on Account of Interest Accrued on Loan Advances - Issue: The Department contested the deletion of Rs. 16,69,700 on account of interest accrued on loan advances to M/s. Vikhroli Metal Fabrication Ltd. - Judgment: The Tribunal confirmed the CIT(A)'s order, following its earlier decision for assessment years 1989-90 and 1991-92, where it was held that interest income should be assessed on a receipt basis. 7. Deletion of Disallowance of Finance Charges - Issue: The Department challenged the deletion of the disallowance of finance charges of Rs. 15,15,000 paid to M/s. Infrastructure Leasing and Finance Ltd. - Judgment: The Tribunal confirmed the CIT(A)'s order, following its previous decision for the assessment year 1992-93. Conclusion: Both appeals were partly allowed, with specific directions for recomputation and re-adjudication based on the principles discussed.
|
